The Nigerian maritime industry is a vital part of the country’s economy, given Nigeria’s status as a major oil producer and exporter. Despite the significant growth and potential of this sector, it continues to face numerous challenges that hinder its full development. The Sea Empowerment Research Centre has conducted an in-depth review of the industry’s performance, highlighting the various hurdles and areas for improvement that are crucial for the industry’s future success.
An Overview of the Maritime Industry Performance
The Nigerian maritime industry remains crucial to the nation’s economy. However, several issues continue to impede its progress.
Safety and Security
Piracy, sea robbery, and illegal bunkering are still prevalent in Nigerian waters. The Nigerian Maritime Administration and Safety Agency (NIMASA), in partnership with the Nigerian Navy, has made commendable efforts to improve maritime safety and security. This partnership has been instrumental in changing the narrative around maritime threats. Additionally, Tantita Security Services Limited (TSSL), a private maritime security firm, has significantly contributed to curbing local maritime threats like oil bunkering and underwater/surface pipeline vandalism.
Infrastructure and Operational Facilities
There is inadequate investment in infrastructure such as ports, harbors, and terminals. This shortfall leads to inefficiencies and occasional port congestion, negatively impacting Nigeria’s global image. Environmental challenges related to marine pollution continue to degrade the ecosystem, further complicating the situation.
Regulatory Compliance
Inconsistencies in the enforcement of regulations and bureaucratic inefficiencies are prevalent. With the repeal of the Nigeria Shippers Council Act of 1979 and the enactment of a new one, stakeholders are hopeful that the new regulatory body will fulfill the required economic and central regulatory functions.
Skilled Workforce
There is a noticeable shortage of skilled personnel, including seafarers, marine engineers, and maritime logistics experts. This shortage is exacerbated by internal politics and a lack of effective mentorship programs. To address these challenges, the Nigerian government should invest in infrastructure, enhance safety and security measures, ensure consistent and efficient enforcement of regulations, and develop a skilled workforce through training and development programs.
The Abysmal Maritime cum Port Industry Global Ranking
The analysis reveals the poor global ranking of Nigeria’s maritime industry.
Delay of Import/Export Processes
Unnecessary bureaucratic procedures prolong cargo clearance, contributing to Nigeria’s poor ranking. According to the World Bank’s Trading Across Border indicator, Nigeria’s ports are ranked 183rd out of 185 countries in terms of efficiency. This inefficiency is a significant barrier to improving the country’s global standing.
Unofficial Charges and Human Interface
Corrupt practices, such as unofficial charges, increase the cost of doing business. Excessive human interaction in cargo handling leads to inefficiencies, further exacerbating the problem. Frequent technical failures disrupt port operations, and safety and security issues deter international shipping companies from Nigerian ports.
Overview of Key Sectors – Performance in 2024
Shipping Sector
The shipping sector experienced mixed results in 2024.
Demand Fluctuations
The tanker shipping market saw lower-than-expected oil demand, impacting crude and product tanker volumes. Conversely, the dry bulk shipping market showed positive trends with expected growth in grain shipments driven by maize. The container shipping market is forecasted to grow in demand by 3% to 4%, with potential supply growth anticipated to be around 6.8%.
Shipbuilding Sector
Shipyard activities are at a near standstill, reflecting stagnation similar to the steel sector. Despite these challenges, there have been significant investments, such as Maran’s order for shuttle tankers, indicating continued investor interest.
Regulatory Sectors
The regulatory agencies within the port system in Nigeria have faced significant challenges in 2024, yet some have made notable progress.
Nigeria Customs Service (NCS)
The NCS has made strides in revenue generation and trade facilitation but continues to battle corruption and inefficiency. New technology and procedures like the Advance Ruling (AR) concept and the Authorized Economic Operators (AEO) program have been introduced to improve efficiency.
Standard Organization of Nigeria (SON)
Despite limited resources and enforcement challenges, SON has introduced measures to enhance the quality of imported goods but must counter the influx of substandard and counterfeit products.
National Agency for Food and Drug Administration (NAFDAC)
NAFDAC plays a critical role in food and drug safety but needs more resources and better enforcement mechanisms. Signed MOUs with the NCS are expected to improve their enforcement capacities.
Nigerian Maritime Safety Agency (NIMASA)
Despite facing political incursions and enforcement challenges, NIMASA has been crucial in ensuring maritime safety and security.
Nigerian Port Authority (NPA)
The NPA has been central in managing and operating ports but needs to address cargo diversions to neighboring countries and issues related to port efficiency.
Nigerian Shippers Council (NSC)
With new legislative powers positioning it as a central economic regulator, the NSC is expected to enhance regulatory compliance within the shipping industry.
Key Issues and Recommendations
Key Issues
The industry continues to struggle with corruption, inefficiency, and limited resources. These key issues hinder the progress of Nigeria’s maritime sector and add to the operational and regulatory challenges. Moreover, non-compliance remains a major concern, impacting the overall industry performance and prompting the need for increased modernization efforts.
Recommendations
Strengthening regulatory agencies to enhance their effectiveness is crucial. Adequate funding and resources must be provided to these agencies, alongside efforts to ensure better enforcement, compliance, and monitoring. Modernizing processes and utilizing advanced technology will significantly improve efficiency and reduce corruption. Encouraging collaboration among stakeholders, offering relevant training to staff, and boosting infrastructure investment are also essential steps towards a more robust maritime industry.
Impact of Foreign Exchange Regime
The fluctuating foreign exchange rate in 2024 significantly affected the Nigerian maritime industry due to its capital-intensive nature. The unpredictable FX rate has made it challenging for investors to ascertain risks and potential returns, thereby reducing investment in the sector. Key impacts include:
Investment Shortfalls
The Nigerian Ports Authority (NPA) struggles to secure funding to upgrade ports to international standards. Heavy reliance on foreign exchange affects the entire industry, raising the costs and complicating business operations.
Shipping and Freight Sector
Unstable foreign exchange rates make budgeting and planning arduous for companies. High import costs due to fluctuating exchange rates affect the broader economy by increasing the cost of goods.
Foreign Investments
The unpredictability dissuades foreign investments due to the high risk associated with the fluctuating exchange rates. Nigeria’s competitiveness in attracting foreign investors is hampered.
To improve the situation, the government needs to ensure a stable and predictable foreign exchange rate to enhance investor confidence and stimulate growth within the maritime sector.
Conclusion
The Nigerian maritime industry plays a crucial role in the nation’s economy, especially considering Nigeria’s position as a leading oil producer and exporter. This sector has seen significant growth and has immense potential, yet it faces numerous impediments that prevent it from reaching its full potential. An in-depth review conducted by the Sea Empowerment Research Centre focused on the industry’s performance in 2024. This comprehensive analysis highlighted the various obstacles and identified key areas for improvement.
Despite its importance, the maritime industry in Nigeria struggles with several issues. These challenges include outdated infrastructure, regulatory inefficiencies, limited access to financing, and security concerns, particularly regarding maritime piracy and theft. Additionally, the lack of skilled labor and adequate training hampers the industry’s efficiency and growth. The Sea Empowerment Research Centre’s review emphasizes that addressing these barriers is crucial for fostering the sector’s development and ensuring its future success.
Investing in modernizing infrastructure, implementing effective regulations, enhancing security measures, and providing proper training programs for the workforce can significantly improve the maritime sector in Nigeria. By tackling these challenges head-on, Nigeria can harness the full potential of its maritime industry, boosting economic growth and securing a more prosperous future.
